Summary of Group results

Swiss Life posts 26% increase in profit from operations to CHF 993 million with net profit after one-off effects of CHF 93 million.

In the 2012 financial year, Swiss Life increased its profit from operations adjusted for one-off effects by 26% from CHF 788 million to CHF 993 million, thanks to further operational improvements and an excellent investment result. One-off effects, in particular as a result of the impairment in the value of AWD’s intangible assets of CHF 578 million, led to reported net profit of CHF 93 million (2011: CHF 606 million). Important contributors to this positive development in the results were the market units in Switzerland, Germany, France and Investment Management. Results in AWD and Swiss Life International were lower than expected.

With CHF 17.0 billion, Swiss Life maintained premium income at its prior-year level and improved its new business margin from 1.2% to 1.4% despite the challenging market conditions. In 2012 the Group generated a return on equity of 0.9%. Adjusted for one-off effects and unrealised gains and losses on fixed-interest investments in equity, return on equity stood at 8.6%. With investment performance of 8.5% (2011: 7.5%), an investment result of CHF 5.7 billion and net investment return of 4.8% (2011: 3.8%) were achieved, which enabled substantial strengthening of the technical reserves.
GROWTH IN THE STRATEGICALLY IMPORTANT BUSINESS AREAS
Swiss Life once again grew in the strategically important business areas. Despite difficult market conditions, the company maintained overall premium volume of CHF 17.0 billion at its prior-year level. Performance in the home market of Switzerland was encouraging with growth of 2% to CHF 8.3 billion, driven by both corporate client business and private client business. Swiss Life in France generated stable premium income on a currency-adjusted basis of CHF 4.3 billion, which is encouraging in light of the 4% contraction in the market as a whole. In Germany too, Swiss Life held its position with premium income at CHF 1.7 billion; while single premiums edged down, periodic premiums were up 2%. The Insurance International segment, where premium income originates largely from global business with high net worth individuals, recorded a currency-adjusted decline of 4% to CHF 2.9 billion. AWD recorded a drop in sales of 13% to EUR 489 million. Assets under management for Investment Management stood at CHF 148 billion (2011: CHF 134 billion). This includes third-party assets in which Swiss Life can report growth of 24% to over CHF 20 billion thanks to additional mandates and positive market developments. Technical provisions to cover obligations to our customers increased by CHF 10 billion to CHF 138 billion, an increase of 8% on the previous year.

IMPROVED EARNINGS POWER DUE TO OPERATIONAL IMPROVEMENTS
In the 2012 financial year Swiss Life increased its profit from operations, adjusted for one-off effects, by 26% from CHF 788 million to CHF 993 million; adjusted net profit stood at CHF 681 million, a 22% rise on the previous year (CHF 557 million). Primarily as a result of the CHF 578 million impairment in AWD’s intangible assets and additional provisions for litigation, together with restructuring costs under the new Group-wide programme “Swiss Life 2015”, this produces reported net profit of CHF 93 million. In Switzerland, Swiss Life posted a segment result of CHF 634 million, up CHF 158 million on the previous year, following efficiency gains and a very good investment result. In France, Swiss Life recorded an increase in profits of CHF 33 million to CHF 157 million due to the good performance of financial products and an improved technical margin. In Germany, Swiss Life improved profits by CHF 11 million to CHF 69 million thanks to a successful investment policy. The Insurance International segment’s result made a loss of CHF 34 million, primarily attributable to restructuring costs and impairment of the customer relationship asset. Investment Management contributed a segment result of CHF 138 million, which was up CHF 8 million on the previous year. The AWD segment adversely impacted the result by CHF –591 million due, as mentioned above, mainly to the CHF 578 million impairment of intangible assets and provisions for litigation.

HIGHER MARGIN AND STRONGER CAPITAL BASE
Swiss Life made further advances in margin management: In 2012 the Group increased its new business margin from 1.2% to 1.4%. The value of new business improved from CHF 150 million in the previous year to CHF 158 million. Swiss Life has a solid capital base: In 2012, shareholders’ equity increased from CHF 9.1 billion to CHF 10.3 billion; the Group’s solvency ratio rose from 213% to 242%. On the basis of its internal model, which is still being reviewed by FINMA, Swiss Life’s SST ratio is in the green.

KEY FIGURES FOR THE SWISS LIFE GROUP
Amounts in CHF million  
  2012 2011 +/–
Gross written premiums, policy fees and deposits received
  17 046 17 143 –0.6%
Net earned premiums and policy fees
  12 180 11 894 2.4%
Commission income
  826 893 –7.5%
Financial result (without share of results of associates)
  6 043 4 459 35.5%
Other income
  25 45 –44.4%
Total income
  19 075 17 291 10.3%
Net insurance benefits and claims
  –13 819 –12 614 9.6%
Policyholder participation
  –1 104 –791 39.6%
Interest expense
  –253 –274 –7.7%
Operating expense
  –3 552 –2 913 21.9%
Total expense
  –18 728 –16 592 12.9%
Result from operations
  346 699 –50.5%
Net profit
  93 606 –84.7%
Equity
  10 286 9 162 12.3%
Insurance reserves
  137 973 128 089 7.7%
Assets under management
  161 740 147 018 10.0%
Assets under control
  181 330 164 604 10.2%
Return on equity (in %)
  0.9 7.3 –6.4 ppts
Number of employees (full-time equivalents)
  7 046 7 168 –1.7%


ASSET ALLOCATION ON A FAIR VALUE BASIS AS AT 31 December (INSURANCE PORTFOLIO AT OWN RISK)
Amounts in CHF million  
  2012 2012 2011 2011
Equity securities and equity funds
  2 158 1.7% 2 602 2.2%
Alternative investments
  664 0.5% 710 0.6%
Real estate
  16 641 13.0% 15 493 13.1%
Mortgages
  5 809 4.5% 5 440 4.6%
Loans
  10 240 8.0% 10 408 8.8%
Bonds
  90 216 70.5% 82 849 70.2%
Cash and cash equivalents and other
  2 223 1.7% 591 0.5%
Total
  127 951 100.0% 118 093 100.0%
 
Net equity exposure
  1.3% 1.1%
Duration of bonds
  10.7 years 10.4 years


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